At the Federal Trade Commission’s request, a federal court has halted a Florida-based telemarketing operation that the FTC alleged was deceptively promoting so-called “extended auto warranties” to consumers nationwide.
The court has issued a temporary restraining order against Fereidoun “Fred” Khalilian and his company, The Dolce Group Worldwide, LLC, d/b/a My Car Solutions. Khalilian is well-known to the FTC from a 2001 settlement that banned him from all travel-related telemarketing and required him to pay $185,000 in consumer redress for making deceptive pitches for travel packages.
The Commission filed a complaint against Khalilian and Dolce Group on June 2, 2010, alleging that since at least 2009, they have marketed purported “extended” auto warranties by blasting prerecorded phone messages, or robocalls, to consumers, warning them that their car’s warranty is about to expire and instructing them to “press one” to talk with a representative. According to the complaint, consumers are then transferred to the defendants’ telemarketers who identify themselves as from the “service contract department,” and state that they will “verify” information about the consumers’ cars and “confirm” other information, including their zip code.
These telemarketers then transfer consumers to a “senior specialist” who allegedly makes more misrepresentations about the company’s affiliation with the consumer’s car manufacturer or dealer. The “senior specialists” often go to great lengths to convince consumers that they are affiliated with car companies or dealers, the FTC charges, making claims such as, “I’m from Honda,” or “I’m from your authorized Honda dealer.”
According to the FTC’s complaint, only after consumers buy the supposed warranties do they discover that My Car Solutions is not affiliated with their car manufacturer. When they receive their warranties in the mail, they also learn that, contrary to what the marketers promised, the warranties do not cover “the entire engine,” do not provide “bumper-to-bumper” coverage, and exclude certain “pre-existing conditions.” Consumers who try to get their money back – typically between $1,300 and $2,485 per warranty – find it nearly impossible, due to the company’s stonewalling.
The complaint charges the defendants with violating the FTC Act by falsely representing:
- that they are calling on behalf of consumers’ car dealers or manufacturers;
- that they know that consumers’ original auto warranties are about to expire;
- that they are offering extensions of consumers’ original auto warranties; and
- that the products they sell provide complete and/or specified coverage for automobile repair.
The FTC’s complaint seeks to permanently stop the defendants’ allegedly illegal conduct. Some of the defendants’ calls were made by Asia Pacific Telecom, Inc., another company the FTC recently took action against.
The Federal Trade Commission says in their complaint:
From at least early 2009, Defendants have deceptively marketed and sold purported “extended auto warranties” by making misrepresentations, including that My Car Solutions is calling from, or on behalf of, the manufacturer or dealer of the consumer’s vehicle.
My Car Solutions contacts consumers through “robocalls” – prerecorded telephone messages. Consumers who answer these calls hear a brief prerecorded message typically warning them that their automobile warranty is about to expire and instructing them to “press one” to speak to someone. When consumers “press one,” they are transferred to My Car Solutions telemarketers who identify themselves as the “service contract depatiment.” Without mentioning My Car Solutions, the telemarketers follow a script and ask consumers to “verify” the year, make, and model of their cars and to “confirm” their zip code. They also refer to the “status” of consumers’ original factory warranties, inform them that their “account[s]” are “on final notice,” and tout an “opportunity to extend your auto protection plan.” These statements aim to convince consumers that My Car Solutions is affiliated with their manufacturer or dealer.
In truth, My Car Solutions is not affiliated with any car manufacturers or dealers and has no information on file about consumers, their cars, or their warranties.
In fact, before My Car Solution’s telemarketers connect with each consumer, they look at the consumer’s telephone number, which is displayed on their computer screen, and type it into an online white pages directory to obtain the consumer’s name so that they can refer to the consumer by name during the call.
Telemarketers transfer consumers interested in purchasing a warranty to so-called “senior specialists,” with statements such as “I will transfer you to a representative of the Ford manufacturer” or “I will put the Ford specialist on the line.” These “specialists” make additional misrepresentations that My Car Solutions is or is affiliated with a car dealer or manufacturer, such as, “I’m from your authorized Honda dealer,” or “I’m from Honda.”
For example, one specialist went to great lengths to convince a consumer he was calling from Volkswagen. He conferenced the local Volkswagen dealer into the call and, when the dealer said that Volkswagen did not offer such an extended warranty, the My Car Solutions representative insisted that he was the Volkswagen manufacturer so he could make the offer.
When consumers receive the warranties in the mail from My Car Solutions, often several weeks after purchase, they learn that My Car Solutions has no affiliation with their car manufacturer or dealer.
They also learn that, contrary to representations made by My Car Solutions telemarketers, the warranties have significant restrictions. Indeed, My Car Solutions representatives state that coverage includes “the entire engine,” but the warranties expressly exclude certain components of the engine. Moreover, in numerous instances salespeople tell consumers that the warranty protects the entire car (“bumper to bumper”) or that it covers whatever parts the consumer specifically asks about.
For example, one consumer was assured a warranty would cover her car’s struts, only to learn from her mechanic after purchasing the warranty that it does not. Another representative told a consumer that the warranty would cover his malfunctioning power seats, but upon receiving the warranty he discovered that it expressly excludes coverage of preexisting conditions.
In numerous instances, consumers who attempt to cancel the warranty and recover their money are forced to go through a burdensome process. They frequently have difficulty reaching someone at My Car Solutions and, when they do, receive onerous and conflicting cancellation instructions.
In addition, in numerous instances My Car Solutions tells consumers that they cannot obtain a refund because more than 30 days have passed, even if the consumer did not receive the warranty packet within that time period. – SourceVehicle Service Contract Marketer Engaged in Misleading Telemarketing by Steve Rhode